The Philippines’ external debt increased by 19.19 percent year-on-year or by $15.63 billion as of end March to $97.047 billion from $81.421 billion as the government accumulated foreign loans for anti-pandemic response and budget financing.
Bangko Sentral ng Pilipinas (BSP) Governor Benjamin E. Diokno reiterated that despite increased foreign borrowing, the country’s debt burden continued to be manageable and that “key external debt indicators remained at prudent levels.”
As a solvency indicator, external debt-to-GDP ratio went up to 27.2 percent in the first quarter this year versus 21.4 percent in 2020. The country’s external debt-to-GDP ratio, however, is one of the lowest in ASEAN.
The BSP reported that the debt stock on a year-on-year basis rose by $15.63 billion because of the following: net availments of $13.5 billion mostly by the National Government (NG) and private non-banks; transfer of Philippine debt papers from residents to non-residents of $1.1 billion; prior periods’ adjustments of $687 million; and positive foreign exchange (FX) revaluation of $390 million.
On a quarter-on-quarter basis, external debt actually fell by 1.5 percent or by $1.4 billion from end-December 2020’s $98.488 billion.
The BSP noted that the debt level dropped during the first quarter because of some $3.1 billion net repayments by private local banks and NG redemption of its maturing bonds.
There was also a negative FX revaluation amounting to $1 billion which “further contributed to the decrease as the US dollar strengthened against other currencies amid the rise in US Treasury bond yield,” among others.
The BSP said the downward impact of the net repayments and FX revaluation more than offset prior periods’ adjustments of $2.3 billion and increase in non-resident investments in Philippine debt papers issued offshore of $365 million.
The country’s external debt maturity profile is predominantly medium to long term (MLT) in nature or with original maturities longer than one year. MLT loans are 85.9 percent of total debt. Short term accounts or up to one year maturity accounted for 14.1 percent.
The weighted average maturity for all MLT accounts slightly increased to 17.1 years end-March from 16.6 years in 2020. The public sector’s average term is 20.9 years compared to the private sector’s 7.3 percent. “This means that FX requirements for debt payments are well spread out and, thus, more manageable,” said the BSP.
As of end-March, public sector external debt dropped to $56.8 billion from $58.1 billion as of end-December, with NG borrowing $50.8 billion of this total while the remaining $5.9 billion are loans of government-owned and controlled corporations, government financial institutions and the BSP.
Private sector debt was almost unchanged at $40.3 billion from $40.4 billion as of end-December.